In November, voters will be asked to raise taxes on C Corporations, those taxed separately from its owners. Measure 97 would tax corporations 2.5{0c2d428c3cefef4a77c472786cabf3d957ca1c1fde265c02f19cd1ec2d7db907} of gross sales over $25 million. The measure would increase the state’s annual revenue by one-third, from approximately $9 billion to an estimated $12 billion.
Measure 97 was designed as a revenue “cure” for Oregon’s state budget public pension/PERS shortfall.
Measure 97 is framed by its supporter, Our Oregon – which has the backing of the state’s public employee unions – as a fairness issue: “It’s time for large, out-of-state corporations to pay their fair share.” Proponents claim it would raise money needed to fund education, health care and senior services. It would lead to the creation of 17,000 new public sector jobs.
Measure 97 – The Negatives
Opponents of the measure voice concerns and offer important insights on the measure’s impact on all Oregonians…
No Guarantees where Tax Revenue Will Go
Secretary of State Jeanne Atkins said, “Perhaps the biggest (criticism) is the argument that there’s a lack of a binding mechanism to say where the revenue would be spent.” In other words, lawmakers could spend the money as they wish!
Not a Cure for State Budget Woes
Soaring public pension costs have created a $1 billion shortfall in the state budget this year. Medicare expansion will cost another $200 million per year. The legislature has been unable to effectively remedy these budget shortfalls. The tax revenue from Measure 97 will not deliver the cure.
Creates a State Sales Tax
As a tax on gross receipts, the measure is a form of sales tax. Corporations will pass this tax onto consumers rather than making out-of-state corporations pay more. The cost of consumer products such as groceries, utilities, insurance, financial services, autos and many others will, in reality, rises due to this measure.
Pacific Power estimated an increase in its tax bill by $40 million dollars. The company says that its only option is to pass that cost on to consumers. Most corporations are expected to follow suit. The nonpartisan Oregon Legislative Revenue Office estimated that Measure 97 will cost Oregonians $600 per capita.
High Impact on the Low- to Middle-Class Oregonians
Most sales taxes exclude necessities, like electricity and food. Opponents call this a “regressive tax” because Measure 97 will tax businesses that provide the necessities of life— with the passed-on costs disproportionately hitting lower wage earners. State economists found that Measure 97’s biggest blow would be dealt to the low- and middle-income Oregonians who can least afford to pay.
Jobs
Several industries enjoy large sales volume, but profit margins at or below the 2.5{0c2d428c3cefef4a77c472786cabf3d957ca1c1fde265c02f19cd1ec2d7db907} tax. Some businesses, particularly those who compete with online retailers, won’t be able to raise prices. Powell’s Books has been a Portland institution for decades. It competes as an independent bookstore against Amazon – who is infamous for its razor-thin margins. Powell’s is worried about its continued existence should this measure pass.
Future retail, service, and manufacturing jobs will be affected. Despite creating 17,000 new public sector jobs, Measure 97 would prevent the creation of 38,000 jobs in the private sector.
There is little question that the state is in financial turmoil and we don’t pretend to know the answer to the PERS funding crisis. However, adding new public sector jobs on the backs of those least able to pay is the opposite of fair. Those paying this tax will not be ‘large, out of state corporations’, but average working Oregonians.
Written by Cardinal Services’ Arin Carmack & Mike Freeman